Seize tremendous market opportunity in Melamine and New Materials industries
Hong Kong, Aug 26, 2014 - (ACN Newswire) - Ko Yo Chem (HKSE:827) announced their interim results for the 6 months ended 30 June 2014. For the first 6 months in 2014, the Group recorded a turnover of approximately RMB738 million, representing an increase of approximately 8.4% as compared with approximately RMB681 million in the corresponding period last year. The total sales volume (excluding the trading portion) of the Group reached approximately 285,000 tonnes (Corresponding period of 2013: 274,000 tonnes), representing an increase of 4% as compared with that of the corresponding period last year.
Both the gross sales volume and sales amount of the Group's products for the first two quarters increased as compared with the corresponding period last year. This was mainly attributable to the fact that the Group capitalized on the rising demand for fertilizer in summer to boost sales for the second quarter. Besides, sales volume of trading products continued to show good momentum of growth. The turnover of trading carbon dioxide, urea, phosphate fertilizers, potash fertilizers, sodium carbonate, ammonia and methanol for the 6 months was approximately RMB262.5 million, representing a sharp increase of 130% (Corresponding period of 2013: approximately RMB114.2 million.
In the reviewing period, the Group's unaudited loss attributable to shareholders was approximately RMB23.1 million (Corresponding period of 2013: approximately RMB25.4 million), representing a decrease of approximately RMB48.5 million compared with the corresponding period last year. It was mainly due to the decrease in selling price of products as a result of market downturn starting in the second half of 2013.
The 1st Phase of the Project in Guangan will commence trial operation in 3Q
Thanks to the coordination among various parties, the Group's 1st Phase of the Project in Guangan with an annual production of 300,000 tonnes of synthetic ammonia and 500,000 tonnes of methanol has formally entered into the trial stage, of which trial operation has commenced as scheduled and made progress. The Group expects the 1st Phase of the Project in Guangan to materialize trial production with material input in the third quarter of the year, and to achieve a capacity of 85% by the end of the year.
The Group has gradually established a sales network for the newly-added methanol and liquid ammonia products and has entered into long-term supply agreements and strategic cooperation agreements with a number of domestic and international methanol purchasers. The aggregate annual purchases of the top 5 customers (methanol and liquid ammonia products) who have entered into supply agreements with the Group have exceeded the annual capacity of the facilities, ensuring the product sales of the Project in Guangan since the commencement of its operation.
Currently, the Group has gathered enough manpower and resources to concentrate on the trial of the 1st Phase of the Project in Guangan. With the operation of the 1st Phase of Guangan Project and the recovery of the methanol market, the Group expects the Project in Guangan will deliver a new growth driver for the Group's operations.
Perfection and Optimization of Melamine Production Technology
During the reviewing period, the project in Dazhou with "an annual production of 300,000 tonnes of urea and 40,000 tonnes of melamine" (the 2nd Phase of the Project in Dazhou) completed the optimization of urea production technology as well as the perfection and optimization of melamine production technology. At present, the projects have been initiated comprehensively. Melamine, a high value-added chemical product with urea as its raw material, is widely used in such products as laminated board, core stock (wood chipboard), tableware and flame retardants, for which the market demand in the future is huge.
Quality and Safety
In terms of quality and safety, the quality and environmental management system of the Group once again passed the review conducted by China Quality Certification Center in June 2014. Over 99% of our urea products are still rated excellent. In compliance with China's new laws for environmental protection and safety production, the Group has repeatedly conducted safety skills training and emergency rescue drills for production and management staff at all levels this year, which has effectively enhanced the overall safety awareness of the Group in production and reduced risks associated with production.
Prospect
The market price of chemical fertilizer mainly relies on the cost of raw materials including coal and natural gas. According to the Notice on Adjustment the Price of Natural Gas of Non-residents introduced by National Development and Innovation Committee, the policy to increase the price of natural gas using in fertilizer industry will be suspended, which is beneficial to the Group in controlling the cost. Meanwhile, the 12th Five Year Plan also anticipates a sharp decrease of the number of chemical fertilizer corporates in China by 2015, implying that the Group has an opportunity to further expand the market as well as increase the market share. Building on the Group's exiting business, Guangan Ko Yo New Materials Co., Limited, which was established to materialize its idea on developing new high technologies and high value-added products, started to initiating a preliminary research on products and technologies. New materials are listed in the Category of the Encouraged Industry of the State. The Group has completed the product research of new materials and preparations for preliminary operation get under way.
"Over the past few months, Chinese government has frequently introduced a series of "mini stimulus" measures to ensure a soft landing. We expects a steady growth in demand from agricultural and industrial sectors during the second half of the year, while demand for urea is expected to increase by approximately 2 million tonnes for the second half of the year and a significant increase in demand for export is also anticipated. With all these favorable factors, the urea market is expected to improve during the second half of the year. In the foreseeable future, we believe that, with the Group's endeavor in expanding market of melamine and new materials, it will bring the Group another huge development space in expanding a much larger market. The Group will continue to strive for the greatest returns for our investor," said Li weiruo, President of Ko Yo Chem.
Source: Ko Yo Chemical (Group) Limited
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